When you’re looking into getting a home loan, it might seem intimidating – especially if it’s not something you’ve done before.

However, if you understand how the process works, as well as the documentation you’ll need to provide, you can make sure it runs as smoothly as it can. Read on to find out about the stages you can expect to go through when applying for a home loan.

1) Do Your Research

Before anything else, you’ll need to research the types of home loan that are available to you to find the one that’s most suitable for your needs. When speaking with a loan specialist, be sure to ask the following questions:

  • What are the fees?
  • What will my monthly repayments be?
  • How long will the repayment term be?
  • What deposit will I need?
  • What are the available options?

2) Understand Your Loan’s Exit Fees, Penalties and Conditions

You’ll need to sit down and work out a budget, either on your own or with a financial advisor, so you know how much money you can afford to pay back. A professional mortgage advisor will also help you to understand the conditions of your home loan, as well as the penalties and fees associated with breaking them. This is something you should factor into your decision on how much to borrow, as you don’t want to stretch yourself too thin.

3) Home Loan Documentation

You’re going to be asked to present several pieces of documentation during the process, including showing you have sufficient funds to handle the property deposit, as well as other fees.

If you’re self-employed, you’ll need to show tax returns and bank statements to cover the past 2 years. If you’re employed, you’ll need to provide payslips. Different forms of ID might also be asked for.

4) Getting Your Loan Approved

There are 4 main considerations that lenders may rely on when assessing your application. These are:

  • Your ability to repay the loan
  • Whether you’re a good financial risk
  • How much collateral on the loan you can offer
  • How much capital you currently own

Getting this application approved is the first major step to owning a property, as pre-approval will help you to move on a property you’re interested in quickly and make you more appealing to the seller than buyers who don’t have it.

5) Buying Your Property

Depending on how you’re going to be buying your property, there will be slight differences in the process.

At auction, you’ll be required to pay a 10% deposit as the auction ends, with no cooling off period. Your agent will then hold the deposit, with any interest split between you and the vendor.

If you’re buying from an offer, you’ll usually have to place a non-refundable payment of 0.25% as a holding deposit on the property. After this, you’ll usually be granted a 5-day cooling off period before the sale is finalised. During this time, you should carry out inspections and valuations and move forward with your lender.

6) Processing the Loan

After you’ve bought your property, you’re up to the final stage of the process – processing the loan. You need to keep your lender informed throughout the buying process to ensure this step runs as smoothly as possible.

The information you should provide them with include your solicitor or conveyancer’s contact details, as well as the contact details of your agent and the contract of sale. If you’re a first-time buyer, here’s where you fill out the forms for the First Home Owners Grant.

After a property valuation has been carried out, your home loan provider will give you formal approval of your home loan and send the documentation to you.

The information and links provided on this website are for general information only and should not be taken as constituting professional advice. This information does not take into account the financial situation or particular needs of individual readers. Before making any decisions about matters discussed on this website, you should consider whether it is suitable for you in light of your own circumstances, and seek appropriate advice.